Debt is a big issue in most divorces these days, and some couples end up fighting about who is responsible for shared debts. Unfortunately, debt issues are complicated because a divorce decree may not be the final word on what happens to debt after your marriage ends.
As any experienced divorce lawyer knows, finances are often one of the most complicated and contentious aspects of a divorce. An attorney might be able to assist you in protecting yourself from debt problems.
Marital Debt Issues and Divorce
A recent Huffington Post article accurately pointed out that creditors aren’t concerned about what your divorce agreement says when it comes to who is liable for shared debts. If you and your spouse both took out a mortgage, applied for a credit card, or borrowed any other money together, you are both responsible for repaying the money.
In your divorce decree, you could indicate that only one spouse has to pay. However, if you both signed the agreement with the creditor, you are both legally bound by it. If your spouse is assigned the debt in divorce and then fails to pay it as promised, the creditor could pursue legal action against you personally.
You’d be left with collection calls, damaged credit, and potentially a judgment against you. You could take your spouse to court to try to make him or her pay, but there’s no guarantee that he’d have the money to be able to do so. Further, that process would take time, during which your credit would be destroyed. Paying the debt yourself is an unattractive solution if your divorce agreement says you don’t have to, although you could pay and then try to go to court to get the cash back from your spouse.
All of this was accurate in the article; however, your divorce attorney will not fail to disclose this information as the article suggests. Instead, your lawyer will help you to find solutions to the problem of divorce debt that doesn’t put your financial future in the hands of your ex.
One option is to try to repay the debt with marital assets in the divorce. If the debt is to be your spouse’s responsibility, insist that it be paid or refinanced into his or her name alone. A credit card balance transfer, a personal loan, or a home refinance loan may all be solutions to get the debt out of your name.
Even if the debt cannot be refinanced immediately, you should include a provision in your divorce agreement specifying a limited period of time for the refinancing to occur. There should be consequences stipulated in the agreement if the debt is not refinanced, like the sale of the property within a designated period of time.
Issues like these are precisely the type of thing that your divorce lawyer should help you to deal with to ensure that your interests are protected when your marriage ends.
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